9 PM Daily Current Affairs Brief – August 26th, 2021

Dear Friends,
We have initiated some changes in the 9 PM Brief and other postings related to current affairs. What we sought to do:

  1. Ensure that all relevant facts, data, and arguments from today’s newspaper are readily available to you.
  2. We have widened the sources to provide you with content that is more than enough and adds value not just for GS but also for essay writing. Hence, the 9 PM brief now covers the following newspapers:
    1. The Hindu  
    2. Indian Express  
    3. Livemint  
    4. Business Standard  
    5. Times of India 
  3. We have also introduced the relevance part to every article. This ensures that you know why a particular article is important.
  4. Since these changes are new, so initially the number of articles might increase, but they’ll go down over time.
  5. It is our endeavor to provide you with the best content and your feedback is essential for the same. We will be anticipating your feedback and ensure the blog serves as an optimal medium of learning for all the aspirants.
  • For previous editions of 9 PM BriefClick Here
  • For individual articles of 9 PM BriefClick Here

Mains Oriented Articles 

GS Paper 1

GS Paper 2

GS Paper 3

Prelims Oriented Articles (Factly)


Mains Oriented Articles


GS Paper 1

Indian treasures at home and abroad

Source: Business Standard

Syllabus: GS 1 – Art and Culture

Relevance: To understand India historical artefacts.

Synopsis: Historically significant sites, artefacts and papers in India and the UK should be made accessible to wider audiences.

Introduction

Recently, the National Gallery of Australia has decided to return 14 ancient Indian paintings and sculptures, including a 12th-century sculpture of a dancing child-saint called Sambandar.

Read more: National Gallery of Australia returns 14 artworks including Chola idols
Indian artefacts in foreign soil

Many Indian art & other valuables were acquired by East India Company & officials between 1858-1947. These are exhibited in:

  1. Victoria and Albert Museum (V&A) in London. The art objects generally belong from the 2nd century BC to the 15th century. For example
    • Shiva Nataraja sculpture: It is made of a copper alloy and listed as a 12th century piece from Tamil Nadu. This piece was “donated” in 1935 by Lord Ampthill who was the Governor of Madras from 1900-1906
    • Another representative piece was part of treasures excavated at Coimbatore, dates back to the 15th century. This item was taken to the V&A in 1927 by Lord Curzon, Viceroy of India from 1898-1905.
  2. The Royal Geographical Society in London: It has priceless drawings of India’s east and west coasts. These were taken by surveyors on board British ships going up and down the east and west coasts of the Indian peninsula in the 17th and 18th centuries.
  3. British Library in London: It holds archives and records of the East India Company (1600-1858), the Board of Commissioners for the Affairs of India (1784-1858) and the India Office (1858-1947). The library has the written records on the deliberations among the East India Company Military Board members about roads, buildings and irrigation works. These include engineering and funding details for bridges on the Grand Trunk Road to Peshawar and digging of the Upper Ganges Canal close to Roorkee in 1842.

Destruction by invaders

The arts were often targeted by invaders with misplaced zeal against idolatry. For instance,

  • In Sarnath, noses and faces on the sculptures have been chipped away.
  • In Elephanta caves where Statues taking back to the 7th century have been disfigured.
  • The large scale ruins of palaces of Vijaynagar Empire at Hampi.

Challenges associated with bringing artefacts to India

  • Given the distance and cost of travel, it is out of reach for historians, academic community and the general public.
  • The chances of the museums returning the artifacts to India are very less.
  • Inter-museum loans are difficult, given the risks of theft during transportation.

So, “The wonder that was India” cannot be experienced by many Indians

Way Forward:

The government can push for a 10 part, 1 hour each documentary series, with 3-D holographic images for artefacts for a real-life experience of History.


GS Paper 2

Don’t chase the mirage of iron-fortified rice

Source: Indian Express

Syllabus: GS2 – Issues related to poverty and hunger

Relevance: about rice fortification programme

Synopsis: Rice fortification programme might not be the answer to India’s food security and nutritional challenges. A push to a balanced and diverse diet is a far more superior strategy. Issues with the recently announced mandatory rice fortification programme.

Background

Read these articles in sequence

Note: Only new points, those not covered in above articles, have been covered in this article.

The problem

There’s extraordinarily high levels of anaemia in India, affecting women and children equally, and despite the mandatory supplementation of iron tablets, it still persists.

  • And an anaemic individual has a lower capacity to work and think, and so the collective capacity of society is at stake.

The govt recently announced the compulsory rice fortification program through PDS. Hence, policy response to the problem of iron supplements not working has been to add even more iron to the diet via fortification.

Is fortification prog necessary?

No. As per some experts, the mandatory rice fortification programme is not required in India and the policy should be re-examined.

There’s a need to examine the intended effect of the programme on anaemia.

Issues/Concerns

1]. Overestimation of anaemia burden: There is a significant overestimation of anaemia burden due to following two factors:

  • High WHO haemoglobin cut-offs: Anaemia is diagnosed on the basis of the blood haemoglobin level. There is a growing global consensus that, the WHO haemoglobin cut-offs used presently, may be too high, resulting in an inflated anaemia figure. A recent Lancet paper suggested a lower haemoglobin cut-off level to diagnose anaemia in Indian children. Using this will actually reduce the anaemia burden by two-thirds.
  • Using capillary blood samples: Secondly, haemoglobin level can be falsely low when a capillary blood sample (taken by finger-prick) is used for measurement, instead of the more reliable venous blood sample (taken with a syringe from an arm vein). The anaemia burden in India is estimated from capillary blood. Global studies, including from India, have shown that using capillary blood inflates the anaemia burden substantially. If the recommended venous blood sample is used, it would halve this burden.

2]. Does iron-deficiency cause anaemia?

  • Not the primary cause: Iron deficiency is thought to be the primary cause of anaemia in India. But recently, a MoHFW national survey (Comprehensive National Nutrition Survey) of Indian children showed that iron deficiency was related to less than half the anaemia cases. Many other nutrients and adequate protein intake are also important, for which a good, diverse diet is required.

3]. Is Indian diet really deficient in iron?

The belief that normal Indian diet is iron-deficient is based on older iron requirements (as per National Institute of Nutrition [NIN] 2010), which were much too high.

  • The latest corrected iron requirements (NIN 2020) are 30-40 per cent lower, with the so-called iron “gap” also being much lower. The iron density of the Indian vegetarian diet, about 9 mg/1000 kCal, can thus meet most requirements and the efforts to mandatorily fortify the dietary iron content for the whole population are unnecessary.

4]. Rice fortification is complex: It requires a fortified rice “kernel” which should be indistinguishable from the grain it is fortifying in appearance, density, cooked characteristics and so on. The problem lies in making “matching” kernels for each rice variety that is distributed in the food safety-net programmes. If it does not match, the instinct of a home cook will be to pick out and discard the odd grains, thereby defeating the purpose of fortification.


Income and quotas

Source: The Hindu

Syllabus: GS 2 – Fundamental rights

Relevance: To understand dimensions of creamy layer

Synopsis: Supreme Court (SC) lays bare the limit of using economic criteria to determine reservation ability

Introduction

In Pichhra Varg Kalyan Mahasabha Haryana v. State of Haryana) case, the Supreme Court recently stated that economic criterion cannot be the sole basis for identifying sections of backward communities as ‘creamy layer’.

Read more: ‘Economic criterion not sole basis for creamy layer’
Indra Sawhney (1992) case judgement
  • The court introduced the concept of “Creamy layer” – the well-off community amongst the Backward Classes.
  • These are persons of high-ranking constitutional functionaries, persons with significant property & agricultural holders, employees of certain ranks in State or Centre government and an identified annual income.
  • The court ruled that these sections should be denied the reservation benefits as they are advanced sections amongst the BC and formulated criteria for identifying them.
Read more: The Mandal case and Reservation in India – Explained, Pointwise
SC judgement in Haryana case
  • It corrected the error by the State which fixed income (6 Lakh) as the sole criteria for identifying the creamy layer which was contrary to Indra Sawhney judgement
  • SC ruled that Haryana’s criteria based on income alone were contrary to its own law that specifies creamy layer would be identified through socio, economic and other factors.
Constitutional Provisions

The recent ruling was based on the ideas of the constitution.

  • The constitution has provided special provisions through the 1st Amendment Act in favour of “socially and educationally backward classes”.
  • This was extended further by providing reservation in government employment for BC.
  • However, the Judiciary later introduced the 50% ceiling and creamy layer concept as a constitutional limitation on reservation benefits.
  • However, the 103 Amendment Act, which introduced a 10% reservation for the Economically Weaker section, has significantly altered the affirmative action programme.
Read more: Maratha Reservation and the Reservation Policy in India – Explained, Pointwise 
Way Forward
  • There is a strange and questionable balance between OBC and EWS in terms of eligibility.
  • So, the creamy layer definition for OBC should go beyond economic parameters.

Terms to know:


Helping and hindering justice

Source: The Hindu

Syllabus: GS 2 – Judiciary

Relevance: To understand the challenges associated with the e-courts project

Synopsis: Pandemic exposed the e-courts project to the outer world. Digitization enabled the Judiciary to respond the online world. However, many challenges also surfaced which need careful consideration.

Introduction

The Supreme Court introduced the system of e-filing and artificial intelligence-enabled referencing. This effort is not just to counter pandemic, it also seeks to improve efficiency and transparency to tackle judicial pendency. It also seeks to make it cost-effective and reachable for all the litigants.

Read more: Inauguration of “Judgments and Orders Portal” and “e-Filing 3.0 module”
SC observation on CoWIN platform

In June, the Judiciary pointed out that despite CoWIN initiative, there were many digital impediments in the delivery of the vaccines. These include:

  • Inadequate digital literacy across the country
  • Inadequate digital penetration
  • Issues of bandwidth and connectivity

These could result in the exclusion of a large segment of the population. The government soon responded by saying CoWin registration would not be mandatory.

Read more: CJI launches “SUPACE Portal”— AI-driven Research Portal

Challenges in e-Courts project

What the Judiciary said about the delivery of Vaccines is equally true about Justice. It is true that Judiciary rose to the challenge posed by Covid 19 and adopted electronic mode at a great pace.

However, one should understand that the technology alone should not be seen as a panacea that will completely cure the Judiciary:

  • Experience shows that despite digitization of Judiciary, from Phase 1 of eCourts since 2007, the current performance of Judiciary during pandemic left a lot to be desired.
  • In fact, pendency reached an all-time high and rose sharply by 18% between December 2019 and December 2020.
  • During the same period, High courts witnessed an increase in pendency by 20%.
Read more: The Pros and Cons of e-Courts project

What is the way forward?

Based on our experience of performance during the pandemic, India should adopt an evidence-based rational approach.

  • First, India should focus on filling vacancies that are reported to be as high as 38% in Higher Courts and 22% in lower courts by India Justice Report 2020. Like doctors, even Judges cannot be replaced by bots of technology.
  • Second, given the digital divide, it should not further accentuate the power divide between the citizens.
  • Third, the shortage of technical infrastructure at times is slowing the procedure and access to justice. This needs to be immediately rectified.
  • Fourth, Just like vaccination procedure was adopted after rigorous trials, judicial procedures should also have to be subject to trials.

Terms to know:


The class divide that threatens to thwart our educational goals

Source: LiveMint

Syllabus: GS 2 – Issues relating to development and management of Social Sector/Services relating to Education

Relevance: Understand the learning loss due to Pandemic

Synopsis: The article highlights the “learning loss” that occurred due to school closure during the pandemic. India has to work hard to ensure that learning loss does not translate to a loss in future.

Introduction

The lockdowns because of the Pandemic impacted the learning, especially for the children. There is no systematic effort to recover that lost learning. Moreover, online education is found to be inadequate for children, because of the nature of education.

What is learning loss?

Learning loss is the product of two factors:

  • What should have been taught and learned in the past 17 months
  • What children knew in Mar 2020 but have forgotten because of extended school break.
Read more: India’s schoolchildren need their childhood back
The class divide has also impacted the learning outcomes:
  • Middle/upper-class people have better access to digital tools augmented by personal tutoring & other learning resources. Moreover, students have the support of their families too, so learning loss is less.
    • India’s top 10% have not been impacted by this crisis
  • But the learning loss impacted the future of almost 210-220 Million children.
Read more: A pandemic-optimized plan for kids to resume their education
Issues with government initiatives:
  • Although some states took steps to address the learning loss, they did not seen adequately cover this problem.
  • The main reason behind that is inflexibility and poor coordination of our education system
Way forward

A lost year means a lost future. So, India must quickly start out schools and work towards bridging the gap of learning by focusing on recovering the lost learning.


GS Paper 3

The dangers of India’s palm oil push

Source: Indian Express

Syllabus: GS3 – Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment

Relevance: Issues associated with Palm oil cultivation

Synopsis: The recent push by Government of India to promote production of palm oil in Northeast and Andaman Nicobar islands has raised various concerns. A brief look.

Context

On August 15th, 2021, PM announced a support of Rs 11,000 crore to incentivize oil palm production. The government intends to bring an additional 6.5 lakh hectares under oil palm cultivation and aims to reduce the country’s dependence on palm oil imports, especially from Indonesia and Malaysia.

Background
  • The Yellow Revolution of the 1990s led to a rise in oilseeds production.
  • Most of these oilseeds are grown in rain-fed agriculture areas of Gujarat, Andhra Pradesh, Haryana, Karnataka, Rajasthan, Madhya Pradesh, Tamil Nadu and Uttar Pradesh.
  • Though there has been a continuous increase in the production of diverse oilseeds — groundnut, rapeseed and mustard, soybean — that has not matched the increasing demand.

Thus, the National Mission on Oilseeds and Oil Palm is a part of the government’s efforts to reduce the dependence on vegetable oil production.

Why the recent push?

The recent push comes from the “success stories” of the two Southeast Asian countries, Indonesia and Malaysia. Indonesia has emerged as a significant palm oil hub in the last decade and has overtaken Malaysia. The two countries produce 80% of global oil palm. Indonesia exports more than 80% of its production.

Must Read: Explore unconventional sources of edible oil
Impact on Malaysia & Indonesia
  • Declining biodiversity– Studies on agrarian change in Southeast Asia have shown that increasing oil palm plantations is a major reason for the region’s declining biodiversity.
  • Loss of forest cover– for example Indonesia has seen a loss of 1,15,495 million hectares of forest cover in 2020, mainly to oil palm plantation
  • Increasing water pollution– in the region due to area expansion for oil palm cultivation
  • Increasing carbon emissions– The decreasing forest cover has significant implications with respect to increasing carbon emission levels and contributing to climate change
  • Affects customary land rights of Forest dwellers–  Legislation allowing the clearing of tree cover and cutting forests for growing palm trees has led to increasing land-related tussles between government officials, locals and agribusiness groups in Malaysia and Indonesia
  • Against the notion of community self-reliance– The initial state support for such a crop results in a major and quick shift in the existing cropping pattern that are not always in sync with the agro-ecological conditions and food requirements of the region
  • Increases vulnerability of farmers– Palm oil cultivation has had a positive impact on poverty eradication in Malaysia by increasing income levels of small and marginal farmers, but in case of variations in global palm oil prices, households dependent on palm oil cultivation still face vulnerabilities from external factors.

In, India’s case it also goes against the government’s commitments under the National Mission for Sustainable Agriculture– which aims to make agriculture more productive, sustainable, remunerative and climate resilient by promoting location specific integrated/composite farming systems. The palm oil mission, instead, aims at achieving complete transformation of the farming system of Northeast India.

Conclusion

The increasing focus on palm oil will gradually result in focus shifting away from rain-fed oilseeds. Apart from the possible hazardous impacts in Northeast India, such trends could have negative implications on farmer incomes, health, and food security in other parts of the country in the long run.

Terms to know


Switch it off!: How light pollution disorients ecosystems

Source: Down to Earth

Syllabus: GS3 – Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment

Relevance: Impact of light pollution

Synopsis: Excessive use of light in urban areas has negative impact on human and animal life. Analysis of the impact and mitigation measures that can be taken.

Context

Watching the night sky, the stars and other astronomical objects is an absolute delight. While one may still observe these phenomena in rural areas, they are becoming increasingly rare in densely populated urban areas. The presence of artificial light in the environment is a major reason behind this.

About Light pollution

“It is an unwanted consequence of outdoor lighting and usually occurs due to excessive and inappropriate artificial light”. There are five components of light pollution:

  1. Urban sky glow– Urban sky glow refers to the brightening of the night sky over urban inhabited areas
  2. Light trespass– The falling of light in an area where it is not intended or needed is called light trespass
  3. Glare– It is the excessive brightness of light, causing visual discomfort and disability.
  4. Uplight– An uplight is directed toward the open sky, causing a very strong, localized form of light pollution.
  5. Clutter– It refers to an excessive grouping of lights, commonly found in over-lit areas.
Causes
  • Poor placement of signage and streetlights
  • Excessive and inappropriate use of light
  • High population density
  • Higher road density and traffic density
  • Environmental conditions such as smog, fog and high levels of suspended particles also increase the intensity of light pollution.
Must Read: Skyglow forces dung beetles to abandon milky way as their compass
Impact 
  • On plants– light pollution affects plants by interfering with photoperiodism. Several biological activities in plants, such as pigment formation, leave shedding and the onset and breaking of bud dormancy are determined by the photoperiod. Increasing lighting can prevent flowering and pollination in plants and hamper reproduction.
    • Photoperiodism: It is the functional or behavioral response of an organism to changes of duration in daily, seasonal, or yearly cycles of light and darkness.
  • On animals– Crepuscular (active only at dusk and dawn) and nocturnal (active only during the night) animals depend on the duration of day (light) length to start / stop their daily activities. Exposure to artificial light interferes with these activities, decreases their chances of finding food and mates and exposes them to predators.
  • On insects– Artificial light at night is one of the important causes of global decline of insects. Amphibians are sensitive to ambient light, long exposure to artificial light can interfere with their reproduction
  • On turtles– Sea turtles lay their eggs on beaches. However, artificial lights on the coasts draw them away from the ocean and in the wrong direction.
  • On nocturnal birds– Nocturnal birds use moonlight and starlight for navigation and hunting and, thus, become disoriented by a large amount of artificial light.
  • On humans– Artificial light causes major sleep disturbances in humans. Brain wave patterns, hormone generation, cell regulation and other biologic functions are affected by light pollution. Light pollution hampers disruption of circadian clock which has been associated with a variety of medical issues, including depression, sleeplessness, cardiovascular disease and cancer
Mitigation
  • We should use light only in places and at times it is needed. Installation of time and motion sensor-based lighting can help achieve this.
  • Efficient lighting should be used and should be directed at the ground, not the sky.
  • A good lighting design should optimize the visibility of the intended object and minimize glare and light trespass.
  • Artificial light should be minimized in ecologically sensitive areas, such as routes for migratory birds and beaches with active hatching of turtle eggs.
  • Proper guidelines should be introduced regarding lighting on the highways and roads in or near forest regions.

Conclusion

Awareness about this lesser-known form of pollution needs to be augmented so that we can fine-tune our activities to reduce the negative impacts and make the world a better place for all beings


Climate crisis putting a billion children at ‘extremely high risk,’ warns new UN report

Source: Down to Earth

Syllabus: GS3 – Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment

Relevance: Impact of climate change on the lives of children

Synopsis: A recent report by UNICEF has stated the children’s across the globe are vulnerable to climate crisis. Article details the findings of the report

Context

Recently UNICEF along with ‘Friday’s with Future’ launched a new report called “The Climate Crisis Is a Child’s Rights Crisis” highlighting the impact of climate change on the lives of children.

The report introduces the new Children’s Climate Risk Index (CCRI), a composite index that ranks nations based on children’s exposure to climate shocks, providing the first comprehensive look at how exactly children are affected by the climate crisis

Findings 
  • Approximately 1 billion children — nearly half the world’s child population — live in countries that are at an “extremely high risk” from climate impacts
  • Almost every single child on the planet has been exposed to at least one climate or environmental stressor, such as air pollution, flooding, heat waves, tropical storms, flooding or drought.
  • The report found that children are “highly exposed” to exceedingly high levels of air pollution, water scarcity, heat waves, vector-borne diseases, tropical storms and coastal flooding.
  • The 33 extremely high-risk countries for children — including the Central African Republic, Chad, Nigeria, Guinea and Guinea-Bissau — collectively are responsible for a mere 9% of global carbon dioxide emissions, reflecting deep inequity regarding who must ultimately deal with the consequences of climate change.
Suggestions
  • Governments and businesses should protect children from the climate crisis by reducing greenhouse gas emissions
  • Increasing investments in health and hygiene services, education and clean water.
  • Providing children with climate education and green skills.
  • Including young people in climate negotiations and decision-making
  • Ensuring a “green, low-carbon and inclusive” COVID-19 recovery “so that the capacity of future generations to address and respond to the climate crisis is not compromised.”

Terms to know:


India has done well to ratify the Montreal accord amendment

Source: Business Standard

Syllabus: GS3 – Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment

Relevance: Understanding India’s ratification to Kigali Agreement

Synopsis: The recent announcement of Government of India to ratify the Kigali agreement is expected to bring various benefits including strengthening India’s global position in fight against climate change

Context

The government’s decision to ratify the amendment to the Montreal accord on phasing out ozone-depleting and environmentally-injurious substances has come at a time just before the UN 26th summit (COP 26). The conference on climate change to be held in November at Glasgow.

Background
  • India has been a party to the adoption of the amendment to the Montreal Protocol at Kigali (Rwanda) in 2016 that called for gradual elimination of the hazardous chemicals commonly used as cooling agents.
  • These substances mostly fall in the category of hydro-fluorocarbons (HFCs) which are injurious to the earth’s ozone layer that protects it from the harmful ultraviolet radiation coming from the sun
  • Though HFCs were introduced as non-ozone depleting alternatives to the relatively more hazardous Hydro-chlorofluorocarbons (HCFCs), they were found to emit highly potent greenhouse gases (GHGs)
  • Thus, Kigali agreement now aims to replace all these chemicals with safer substitutes.
India’s strategy
  • A national strategy to discontinue the use of HFCs is proposed to be crafted by 2023 in consultation with the various stakeholders.
  • This would involve a four-phased cutback schedule aimed at a cumulative reduction of 10% by 2032, 20% by 2037, 30% by 2042 and 85% by 2047.
  • This structure is in line with the target of eliminating HFCs by the late 2040s
Benefits of HFC phaseout
  • The elimination of HFCs at the global level is estimated to reduce GHG emissions equivalent to around 105 million tonnes of carbon dioxide
  • It would help avoid up to 0.5 degrees Celsius rise in temperature by the end of this century, even while allowing the ozone layer to repair itself.
  • Benefits to India:
    • For India, the notable gain would be the opening of the door for indigenous production of equipment as well as cooling agents, which are non-HFC and have low global warming potential.
    • The next generation refrigerants and refrigeration technology is expected to involve the use of relatively safer chemicals like hydro-fluoro-olefins (HFOs) or admixtures of HFCs and HFOs.

Terms to know


It’s time for Industry 4.0

Source: The Hindu

Syllabus: GS3 – Science and Technology- Developments and their Applications and Effects in Everyday Life.

Relevance: Modernization of Indian MSME’s

Synopsis: MSMEs are significant to India. India can leverage multiple benefits by integrating ‘Industry 4.0’ features in Indian MSMEs.

What is ‘Industry 4.0’?

The term ‘Industry 4.0’ was coined by the German government in 2011. Additive manufacturing, Internet of Things, Cyber Physical Systems, Augmented Reality/Virtual Reality and data analytics are some technologies associated with Industry 4.0.

With the help of these technologies, the manufacturing industry will be able to make data-driven decisions. The reduced costs of electronics like sensors, transmitters, and cloud have allowed us to capture the data produced during operational activities. With the availability of advanced algorithms, this captured data can be analysed for decision-making in real time.

Thus, Industry 4.0 integrated ‘data’ with manufacturing and Information Technology.

Significance of MSMEs to India
  • MSMEs form more than 95% of the industries in India, produce more than 45% of the total manufacturing output and employ more than 40% of the workforce.
  • According to the Economic Survey 2020-21, over 6 crore MSMEs employ more than 11 crore people and contribute roughly 30% to the GDP and half of the country’s export.
  • MSMEs are also ancillaries to larger enterprises, leading to a seamless supply chain integration. As a result, making MSMEs more efficient will be advantageous for the whole economy.
Challenges in adoption of Industry 4.0 by MSMEs
  1. Lack of awareness: First, they lack awareness regarding Industry 4.0 and its benefits. They consider such technologies disruptive and having the potential to demolish their existing system. However, Industry 4.0 improves the existing system. Sensors and WiFi networks being integrated with old machines like lathes and mills will improve their performance.
  2. Major financial investments: Second, MSMEs will need to make major financial investments to adopt Industry 4.0. Investing in the right set of technologies will need experts and consultants as well.
  3. Lack of assistance: Thirdly, the framework and steps that can assist MSMEs in adopting Industry 4.0 technologies have been missing. In this regard, MSMEs need to understand the data they are producing from all their operational activities. Based on such data, their readiness can be evaluated.
  4. Lack of vision: Finally, MSMEs should develop their own vision of Industry 4.0 technologies that they want to adopt and identify the relevant tools and practices they need for such a tailored vision.
Benefits to MSMEs
  • The adoption of Industry 4.0 technologies by MSMEs will make them more competitive as they will be able to offer world-class quality products to customers.
  • Additionally, delivery timings and the flexibility to meet different needs will improve.
Way forward

Proper sensitization of the Government of India, higher education institutions, practitioners, entrepreneurs, industrial associations, trade unions, venture capitalists, consultants and research agencies would help to speed up this task.


A way of diluting credit discipline (On RBI’s current account circular)

Source: The Hindu

Syllabus: GS3- Mobilization of Resources, Growth, Development

Relevance: Credit Discipline, Regulations by RBI

Synopsis: Recent RBI circular on opening current accounts will have the counter-intuitive effect of diluting credit discipline rather than strengthening it.

Context

Recently, some bank borrowers have gone to court demanding that it quash the Reserve Bank of India (RBI) circular on opening current accounts. However, now the RBI has extended the date for compliance.

Must Read: Avoid arbitrary regulation
Why such move by RBI?

Current accounts with non-lending banks are an important channel for diversion. Internal diversion is for non-priority purposes and funds are diverted to other firms, owned or controlled by the same group, friends or relatives.

What are the regulations?
  1. If borrowing is through a cash credit or overdraft account, no bank can open a current account.
  2. If a borrower has no cash credit or overdraft account, a current account can be opened subject to restrictions.
  3. If the bank’s exposure is less than 10% of total borrowings, debits to the account can only be for transfers to accounts with a designated bank.
  4. If total borrowing is ₹50 crore or more, there should be an escrow mechanism managed by one bank which alone can open a current account.
Issues with the regulations:
  1. First, if a borrower has an overdraft, how can there not be a current account? An overdraft is the right to overdraw in a current account up to a limit.
  2. Second, the circular forecloses operational flexibility.
  3. Third, why should a bank with low exposure transfer funds to another bank when it can use it to adjust other dues with it?
  4. Fourth, there is a mismatch between what a borrower needs and the regulations allow. Support of non-lending banks through current accounts in other banks is required for large accounts. The circular rules out this possibility.
  5. Fifth, transactions in an active current account enables a bank to monitor a borrower’s account. The lack of such control will increase NPAs.
  6. Sixth, the regulation mandates splitting working capital into loan and cash credit components across all banks. Such a one-size-fits-all regulation does not factor in the purpose of the different facilities.
Other regulatory issues
  • First, it is more effective to base regulation on principles that focus on outcomes rather mere compliance.
  • Second, regulation needs to use more generic terms. Terms such as Working Capital Term Loan might mean different things in different banks.
  • Third, it is questionable to design regulation to target exceptional events such as diversion of funds as it is better to leave it to management.
  • Fourth, the costs of regulation should be justified by the benefits.
  • Lastly, when regulation ignores market practices, it lacks legitimacy and when legitimacy is wanting, compliance suffers.

Conclusion

Forced compliance is leading to a new banking practice of overdraft in fixed deposits. A bank could also merely rename current accounts as overdraft, as there is no bar in having a credit balance in an overdraft account.


Inside the RBI’s digital currency dream (On CBDC)

Source: Live Mint 

Syllabus: GS3- Indigenization of Technology and Developing New Technology. 

Relevance: Future of Central bank digital currency 

Synopsis: CBDC is likely to be in the arsenal of every central bank going forward. Factors behind sudden global interest of CBDC, its need and associated challenges.

Context

RBI may come out with a model for the implementation of a government-backed digital currency by the end of this year. 

Must Read: What is a CBDC?
Why a sudden global interest in CBDC’s?

Globally, there are two factors behind this sudden interest in CBDCs.

  1. First is the rise of cryptocurrencies such as bitcoin, and
  2. Second, the proposed launch of a Facebook-backed digital stablecoin called Diem (formerly known as Libra).
    • A stablecoin is a digital currency that is linked to an underlying asset, such as a national currency like the US dollar or a precious metal like gold. For example, Tether, the largest stablecoin, is backed by the US dollar on a 1:1 basis.

Also, there is intense competition between central authorities and private players who are simultaneously attempting to bring in greater efficiency to payments. Central banks certainly don’t want to end up on the losing side.

Must Read: Private partners could help RBI run a digital currency
Need for CBDC 
  1. Much effective than traditional financial system to effectively handle cross-border trade and movement.
  2. Existing SWIFT system of (international) money transfer ensures that the US has a disproportionate control of the (current) global settlement process. CBDC can ensure a level playing field.
  3. Enables Faster money transfer at low cost.
  4. Reduction in the compliance burden
  5. CBDC’s are necessary to protect the public in an environment of volatile private virtual currencies
  6. Will help India to slowly move towards a cashless economy
CBDCs role in welfare schemes

Over the years, one major shortcoming of traditional money has been in the area of delivering welfare schemes.

In India, the DBT program is currently in place to enable the transfer of subsidies directly to a person’s bank accounts.

  • However, sending money via traditional banking channels is costly, as banks have to adhere to KYC and anti-money laundering requirements.
  • Since CBDCs are programmable money and can be embedded with a computer code, a digital rupee can hold KYC information within itself.

Therefore, a central bank-issued digital currency can ultimately lower the cost incurred by banks.

Must Read: Merits of an RBI currency outweigh the risks

The challenges 

  1. Operational challenges: The RBI will need to decide about
    • the degree of anonymity when transacting via CBDC.
    • whether CBDC can be utilized for both retail payments (peer to peer) or will it be limited to wholesale payments (among banks and financial institutions for the settlement of transactions);
    • whether CBDC units will be interest bearing
  2. Privacy concerns: Centralized ownership would make all money traceable by the government.
  3. Managing Future risks: Governance and control structures will need to be updated to manage the unique risks which will arise with CBDC.
  4. Legal challenges: Several amendments to existing banking norms will be required to enable a digital currency (as opposed to paper currency).

Prelims Oriented Articles (Factly)


Government approves determination of Fair and Remunerative Price of sugarcane payable by Sugar Mills for sugar season 2021-22

Source: PIB

What is the news?

The Cabinet Committee on Economic Affairs has recently approved an increased Fair and Remunerative Price (FRP) of sugarcane for sugar season 2021-22 (October – September).

About the decision

The decision will benefit the 5 crore sugarcane farmers as well as the 5 lakh workers employed in the sugar mills and related ancillary activities.

Read more: Implications of Cheap Sugar in India – Explained, Pointwise
About the Fair and Remunerative Price(FRP):
  • The Fair and Remunerative Price(FRP) is the minimum price that sugar mills have to pay to sugarcane farmers.
  • FRP is determined by the Central Government on the basis of the recommendations of the Commission for Agricultural Costs and Prices(CACP).
  • The ‘FRP’ of sugarcane is determined under Sugarcane (Control) Order and announced by the Cabinet Committee on Economic Affairs(CCEA).
  • The final FRP is arrived at by taking into account various factors such as cost of production, domestic and international prices, overall demand-supply situation, intercrop price parity among others.
About the CCEA:
  • Cabinet Committee on Economic Affairs(CCEA) is one of the standing committees of the cabinet constituted by the government of India. The committee is headed by the Prime Minister.
  • The major function of the CCEA is to review economic trends on a continuous basis as also the problems and prospects with a view to evolve a consistent and integrated economic policy framework for the country.
About the CACP
  • The Commission for Agricultural Costs and Prices(CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. It came into existence in January 1965. It is an advisory body whose recommendations are not binding on the Government.

CBI, ED can’t keep sword hanging over accused: Supreme Court

Source: Times of India

What is the news?

The Supreme Court recently stated that the investigation agencies (CBI, ED) should not keep the “sword hanging” over the accused and there must be time-bound completion of investigations.

About the case:

The Supreme Court is hearing a petition against the delay by the agencies in prosecuting MPs and MLAs in cases registered against them years ago.

CBI, ED can’t keep sword hanging over accused_SC
Source: TOI
About the delays in the investigation:
  1. As per the report filed by the amicus curiae, 51 MPs and 71 MLAs/MLCs are accused in cases arising out of offences under the Prevention of Money Laundering Act, 2002.
  2. A total of 121 CBI cases against MPs/MLAs are pending before the court. Of these, 58 cases are punishable with death or life imprisonment. The oldest case is from 2000 and 37 cases are still under investigation.
Court observations about Issues with CBI and ED probes:
  1. The court refused to pass an order directing the agencies to complete the probe in all cases involving lawmakers within six months. The court cited two reasons for that,
    1. It would demoralize the investigating agencies.
    2. The lack of Judges in the Judiciary to conduct the trial if such order was pronounced.
  2. The Court asked for the Centre’s response on a suggestion to set up a monitoring committee to ensure that the probe is completed within a reasonable time. The committee will consist of the following members,
    1. Former SC judge or former HC chief justice
    2. ED director (or his nominee not below the rank of an additional director),
    3. CBI director (or his nominee, not below the rank of an additional director),
    4. Home Secretary (or his nominee not below the rank of joint secretary),
    5. A judicial officer not below the rank of a district judge to be nominated by SC.
  3. The bench also decided to have a meeting with CBI and ED to discuss the need for additional manpower and expansion of infrastructure to enable the agencies to complete their tasks in time.

Amicus curiae: An amicus curiae is someone who is not a party to a case who assists a court by offering information, expertise, or insight that has a bearing on the issues in the case. The decision on whether to consider an amicus brief lies within the discretion of the court.

Terms to know:


Climate crisis putting a billion children at ‘extremely high risk,’ warns new UN report

Source: Down to Earth

What is the news?

A recent report by UNICEF has stated the children’s across the globe are vulnerable to climate crisis. Article details the findings of the report

Children’s Climate Risk Index (CCRI)

Recently UNICEF along with ‘Fridays with Future’ launched a new report called “The Climate Crisis Is a Child’s Rights Crisis” highlighting the impact of climate change on the lives of children.

The report introduces the new Children’s Climate Risk Index (CCRI), a composite index that ranks nations based on children’s exposure to climate shocks, providing the first comprehensive look at how exactly children are affected by the climate crisis

Findings 
  • Approximately 1 billion children — nearly half the world’s child population — live in countries that are at an “extremely high risk” from climate impacts
  • Almost every single child on the planet has been exposed to at least one climate or environmental stressor, such as air pollution, flooding, heat waves, tropical storms, flooding or drought.
  • The report found that children are “highly exposed” to exceedingly high levels of air pollution, water scarcity, heat waves, vector-borne diseases, tropical storms and coastal flooding.
  • The 33 extremely high-risk countries for children — including the Central African Republic, Chad, Nigeria, Guinea and Guinea-Bissau — collectively are responsible for a mere 9% of global carbon dioxide emissions, reflecting deep inequity regarding who must ultimately deal with the consequences of climate change.
Suggestions
  • Governments and businesses should protect children from the climate crisis by reducing greenhouse gas emissions
  • Increasing investments in health and hygiene services, education and clean water.
  • Providing children with climate education and green skills.
  • Including young people in climate negotiations and decision-making
  • Ensuring a “green, low-carbon and inclusive” COVID-19 recovery “so that the capacity of future generations to address and respond to the climate crisis is not compromised.”

Terms to know:


Emission reduction of 28% over 2005 levels, against the target of 35% by 2030 already achieved by India

Source: PIB

What is the news?

While addressing the keynote address at the ‘INDIA-ISA Energy Transition Dialogue 2021’ organized  by the International Solar Alliance (ISA) and the Union Ministry of New and Renewable Energy (MNRE), The Union Minister of Power and New & Renewable Energy, highlighted major achievements of India in the field of energy efficiency and transition.

India’s Achievements
  • India has achieved emission reduction of 28% over 2005 levels, against the target of 35% by 2030 committed in its NDC (Nationally determined contributions)
  • India, is among one of the few countries globally which has kept to its Paris Climate Change (COP21) commitments along with an exponential increase in renewable energy capacity.
  • It is anticipated that by 2050, 80-85% of India’s overall power capacity will come from renewables.
  • The Indian Power Sector achieved the milestone of 100 GW of installed Renewable Energy Capacity.
  • 38.5% of India’s installed power generation capacity is based on clean renewable energy sources.
  • India stands at 4th position in the world in terms of installed RE capacity, 5th in Solar and 4th in Wind energy capacity.
  • Dedicated Green Energy Corridors initiated by the MNRE making it easier for renewable energy developers to avail grid connectivity.

Terms to know:


India pips US to rank second in list of most attractive manufacturing hub globally; China first

Source: Indian Express

What is the News?

The Global Manufacturing Risk Index 2021 has been released.

About Global Manufacturing Risk Index:

  1. Released by: US-based property consultant Cushman & Wakefield
  2. Purpose: To assess and rank the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas and Asia-Pacific (APAC).
  3. Parameters: The ranking is determined based on four key parameters:
    • Country’s capability to restart manufacturing
    • Business environment (availability of talent/labour, access to markets)
    • Operating costs
    • Risks (political, economic and environmental).

Key Findings of the Index:

  1. India has overtaken the United States (US) to become the second-most sought-after manufacturing destination globally.
  2. China remains at the number one position and the US is now at the third position.

Reasons for India’s improvement in ranking:

  1. India’s improvement in ranking can be attributed to India’s operating conditions and cost competitiveness.
    • India has a huge population, which means a younger workforce with innovative capabilities that has the potential to fuel the country’s manufacturing sector.
  2. The improvement in ranking can be also attributed to plant relocations from China to other parts of Asia such as India where there is an already established base in pharma, chemicals and engineering sectors.
  3. However, reforms in land and labour laws are critical to ensure India’s success as a global manufacturing hub.

e-Shram portal: A database for unorganised sector workers

Source: Indian Express

What is the News?

The Minister for Labour and Employment will launch an e-Shram portal.

About e-Shram portal:

  1. The e-Shram portal is a database of unorganised sector workers. The portal aims to register 38 crore unorganised workers, such as construction labourers, migrant workforce, street vendors and domestic workers among others. 
  2. After registration, the workers will be issued an e-Shram card containing a 12 digit unique number, which will help the government in including them in social security schemes.

Registration Process on e-Shram Portal:

  1. A worker can register on the portal using his/her Aadhaar card number and bank account details, apart from filling in other necessary details like date of birth, home town, mobile number and social category.
  2. Moreover, a national toll-free number — 14434 — will also be launched to assist and address the queries of workers seeking registration on the portal.

Pension scheme for informal workers hits stagnation point

Source: Livemint

What is the News?

The number of people joining the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) scheme, has hit an all-time low. This is due to workers in the informal sector facing income and job loss following the two waves of the coronavirus pandemic.

About Pradhan Mantri Shram Yogi Maan-dhan(PM-SYM) Scheme:

  1. Launched by: Ministry of Labour and Employment 
  2. Type: Central Sector Scheme 
  3. Aim: It is a voluntary and contributory pension scheme that aims to ensure old age protection for Unorganised Workers.
  4. Coverage: The scheme covers unorganised workers (home-based workers, street vendors, mid-day meal workers, head loaders, landless labourers and similar other occupations) whose monthly income is Rs 15,000/ per month or less. The beneficiary should also belong to the entry age group of 18-40 years.
    • Moreover, they should also not be covered under New Pension Scheme (NPS), the Employees’ State Insurance Corporation (ESIC) scheme or the Employees’ Provident Fund Organisation (EPFO). Further, he/she should not be an income taxpayer.

Key Features of the Scheme:

  1. Minimum Assured Pension: Each subscriber under the PM-SYM, shall receive a minimum assured pension of Rs 3000/- per month after attaining the age of 60 years.
  2. Matching Contribution: It is a contributory pension scheme on a 50:50 basis where prescribed age-specific contributions shall be made by the beneficiary and the matching contribution by the Central Government. 
    • For example, if a person enters the scheme at an age of 29 years, he is required to contribute Rs 100/ – per month till the age of 60 years an equal amount of Rs 100/- will be contributed by the Central Government.
  3. Family Pension: During the receipt of a pension, if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as a family pension. Family pension is applicable only to spouses.
    • If a beneficiary has given regular contribution and died due to any cause (before age of 60 years), his/her spouse will be entitled to join and continue the scheme subsequently by payment of regular contribution or exit the scheme as per provisions of exit and withdrawal.
  4. Fund Management:  The scheme will be implemented through the Life Insurance Corporation of India and CSC eGovernance Services India Limited (CSC SPV). LIC will be the Pension Fund Manager and responsible for Pension payouts. 

NCL, Ministry of Coal initiates Massive Campaign against Malnutrition as part of Azadi Ka Amrit Mahotsav Celebrations

Source: PIB

What is the News?

Northern Coalfields Limited (NCL), a Miniratna company under the Ministry of Coal has launched Project Bachpan as part of Azadi Ka Amrit Mahotsav Celebrations

About Project Bachpan:

  1. Project Bachpan was launched based on the MoU signed between Northern Coalfields Limited (NCL) and Singrauli District Administration, Madhya Pradesh.
  2. Aim: The project aims to eradicate the menace of child malnutrition in and around the surrounding areas of NCL.
  3. Under the Project, nutritional needs of more than 260 undernourished children will be taken care of. This will ensure the malnourished children’s good health and wellbeing

Finance Minister unveils 4th edition of Public Sector Bank Reforms Agenda – EASE 4.0

Source: PIB

What is the News?

The Union Minister of Finance and Corporate Affairs has unveiled the fourth edition of the Public Sector Bank (PSB) Reforms Agenda ‘EASE 4.0’ for 2021-22.

About EASE:

  1. Enhanced Access and Service Excellence(EASE) is a common reform agenda for Public Sector Banks (PSBs). It is aimed at institutionalizing clean lending, better customer service, simplified and enhanced credit and robust governance and HR practices. 

EASE 1.0:

  • The EASE 1.0 was aimed at enabling banking from home, effective grievance redressal and responsible banking through monitoring of large-value stressed loans among others.

EASE 2.0:

  1. The EASE 2.0 was launched in FY20 to further build on the foundation of EASE 1.0. It focussed on CLEAN and SMART banking.

EASE 3.0:

  1. The EASE 3.0 was launched in FY21. It focuses on the transformation of Public Sector Banks(PSBs) into Digital and Data-driven Banks through smart lending, Technology enabled ease of Banking, Credit@click, Dial-a-loan, Prudent Banking among others.

Achievements of EASE 3.0:

  1. Public Sector Banks(PSBs) have reported healthy profits in FY21 as compared to losses in FY20. This is the first year when PSBs have reported a profit after five years of losses. 
  2. The total gross non-performing assets stood at Rs. 6.16 lakh crore as of March 2021 –  a reduction of Rs. 62,000 crore from March 2020 levels.
  3. Nearly 72% of financial transactions happening at PSBs are now happening through digital channels. 
  4. PSBs are now offering services across call centres, Internet banking, and Mobile banking in 14 regional languages.

EASE 4.0:

Ease 4.0
Source: PIB
  • EASE 4.0 aims to further the agenda of customer-centric digital transformation and deeply embed digital and data into PSBs’ ways of working.  
  • Themes: The key themes under EASE 4.0 are:
    1. Smart Lending
    2. New Age 24×7 banking with resilient technology 
    3. Data-Enabled agricultural financing
    4. Collaborative banking for synergistic outcomes.

UN Assistance Mission in Afghanistan(UNAMA)

Source: The Hindu

What is the News?

The Taliban Sanctions Committee will hold an important meeting to discuss the renewal of the mandate of the UN Assistance Mission in Afghanistan(UNAMA).

About UN Assistance Mission in Afghanistan(UNAMA):

  1. UNAMA is a UN Special Political Mission established to assist the state and the people of Afghanistan in laying the foundations for sustainable peace and development.
  2. Established in: UNAMA was established in 2002 by United Nations Security Council Resolution 1401. 
  3. Mandate: Its original mandate was to support the implementation of the Bonn Agreement. Reviewed annually, this mandate has been altered over time to reflect the needs of Afghanistan.
    1. Bonn Agreement was the initial series of agreements passed in 2001 and intended to recreate the State of Afghanistan following the U.S. invasion of Afghanistan in response to the September 11, 2001, terrorist attacks.
  4. Headquarters: Kabul, Afghanistan.

About Taliban Sanctions Committee:

  1. Taliban Sanctions Committee is also known as the 1988 Sanctions Committee. The committee oversees the sanctions measures imposed by the Security Council.
  2. The Committee comprises all 15 members of the Security Council and makes its decision by consensus. 
  3. The current Chair of the Committee, for the period ending 31st December 2021, is India.

Fukushima nuclear water to be released via undersea tunnel

Source: The Hindu

What is the News?

The Japanese Fukushima nuclear power plant operator has planned to build an undersea tunnel so that massive amounts of treated but still radioactive water can be released into the ocean.

About Fukushima Nuclear Power Plant:
  1. Fukushima Nuclear Power Plant is located in the town of Okuma, Japan. The reactor is located about 220 km northeast of the capital Tokyo.
  2. The 2011 Earthquake destroyed the Fukushima Nuclear Power Plant’s electricity and cooling capacity. Since then, Japan has been struggling with the piling-up of contaminated radioactive water from nuclear plant.

How has Japan planned to treat the radioactive water?

  1. The Japanese Government has planned to build an undersea tunnel so that massive amounts of treated but still radioactive water can be released into the ocean.
  2. The discharge would be about one kilometre away from the plant to avoid interference with local fishing.

The saroop of Sikh Holy Book

Source: Indian Express

What is the News?

The Union Minister of India has received one of the Saroops of the holy Guru Granth Sahib flown in from Afghanistan.

What is Saroop?

  • Saroop is a physical copy of Sri Guru Granth Sahib also called Bir in Punjabi.
  • Every Bir has 1,430 pages, which are referred to as Ang. The verses on every page remain the same.
  • The Sikhs consider the Saroop of Guru Granth Sahib a living guru and treat it with the utmost respect.
  • They believe that all the 10 Gurus were the same spirit in different bodies, and the Guru Granth Sahib is their eternal physical and spiritual form.

Who compiled the Guru Granth Sahib?

  1. Guru Granth Sahib is a compilation of hymns written by six Sikh gurus,15 saints, including Bhagat Kabir, Bhagat Ravidas, Sheikh Farid and Bhagat Namdev, 11 Bhatts (balladeers) and four Sikhs.
  2. The fifth Sikh Master, Guru Arjan Dev compiled the first Bir of the Guru Granth Sahib in 1604 and installed it at the Golden Temple in Amritsar.
  3. Later, the tenth Sikh master, Guru Gobind Singh, added verses penned by the ninth master, his father Guru Tegh Bahadur, and compiled the Bir for the second and last time.
  4. It was in 1708 that Guru Gobind Singh declared the Guru Granth Sahib the living Guru of the Sikhs.

Who publishes Guru Granth Sahib?

  1. The installation and transportation of Guru Granth Sahib is governed by a strict code of conduct called rehat Maryada.
  2. Currently, the Shiromani Gurdwara Parbandhak Committee(SGPC) has the sole rights to publish the Birs of the Guru Granth Sahib, and this is done at Amritsar

Afghans can enter India now only on e-visas

Source: The Hindu

What is the News?

The Government of India has said that all Afghan nationals must travel to India only on a special e-Visas issued by the Government of India. 

What is the decision taken by the Government of India?

  1. The Government of India has cancelled all previously issued visas to Afghan nationals who are presently not in the country.
  2. It has announced that all Afghans must enter India now only on special e-visas applied online. 
  3. Such special e-visas may be granted only with a single entry and for the specific duration, taking into account the purpose of visit.

Earlier Process:

  1. Earlier, the e-Visa facility was not available to Afghans as Afghanistan comes under the Prior Reference Category (PRC) of countries for grant of visa which means Afghan nationals have to be cleared by the Ministry of Home Affairs(MHA) for any visit. 
  2. Others in this category include nationals of Pakistan, Iraq, Sudan, foreigners of Pakistani origin and stateless persons.

Auto firms want policy shift to make vehicles affordable

Source: Livemint

What is the news?

India’s automobile industry recently asked the government to frame policies that would make vehicle purchases more affordable for customers to revive sales. India’s two-wheeler makers have also been urging the Union government to reduce goods and services tax (GST) imposed on entry-level two-wheelers to 18% from the existing 28%.

Reason 

Sales of entry-level two-wheelers have remained low due to an economic slowdown and increase in ownership cost.

Hence, the industry requested the govt for policies that would help recovery in sales, especially of passenger cars and two-wheelers.

Present scenario
  1. First, automobile sales in India have been on the downtrend since the second half of FY19 when the bankruptcy of Infrastructure Leasing and Financial Services caused a liquidity crisis among non-banking financial companies (NBFCs).
  2. Second, higher fuel prices, weak consumer sentiment and an increase in vehicle prices to meet new regulations on safety and emissions led to a decline in car sales in FY20.
  3. Third, the outbreak of the pandemic led to another double-digit decline in sales in FY21 as sales and manufacturing operations came to a halt due to a strict nationwide lockdown. The second covid wave also derailed a possible recovery.
  4. Fourth, adequate policy measures have not been announced to arrest the decline.
  5. Fifth, new regulations such as Bharat Stage VI (BS-VI) emission norms and higher taxes imposed by states have made entry-level cars unaffordable for buyers. This coupled with taxes imposed by states have made the increase substantial for a price-sensitive customer.

Conclusion

The need is to come up with policy support to encourage the recycling of components such as lithium batteries and motors used in electric and combustion engine vehicles. The policies should take into account the carbon footprint of a product in its entire lifecycle.

Terms to know:

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